ERSA Working Paper Series
type: channel
description: ERSA’s Working Paper Series was established in 2004 with the first Working Paper being published in February of 2005. The Working Paper Series remains one of the central mechanisms through which ERSA supports the quantity, quality and relevance of economic research produced in South Africa.
publisher: Economic Research Southern Africa
language: en
publication name: ERSA Working Paper Series
items: Industrial-policy objectives in South African competition policy
items: Digital Infrastructure as a Driver of Inclusive Growth
items: Narrow Price Parity and Market Power in Digital Platforms
items: Twenty-five years of inflation targeting and the new inflation target
items: Breaking the regravelling trap: A fiscal-federalism contract for upgrading South Africa’s unpaved roads
items: Institutional Quality: A hurdle or a catalyst to eliminating energy poverty in sub-Saharan Africa?
items: Regulating digital platforms: A comparative analysis of Kenya and South Africa
items: Unlocking Manufacturing Growth in South Africa: Firm Productivity, Labour Mobility and Participation
items: Trade under duress: Assessing South Africa’s trade diversification toward China in response to U.S. tariff actions
items: Services-led growth in the context of de-industrialization: Opportunities for structural transformation and job creation in South Africa
items: Towards an Integrated Agricultural Growth Path for South Africa
items: Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa
items: Power, People, and Productivity: Skills Development for South Africa’s Just Energy Transition
items: Firm Adaptation and Reallocation under Rationing: Evidence from South Africa
items: Fiscal r-star and macroeconomic coordination in South Africa
items: The Structural Change Emergency in South Africa
items: Reigniting Investment in South Africa
items: Public debt and inflation dynamics in South Africa: An estimated NK-DSGE model with a monetary and fiscal policy mix regime
items: Enhancing merger control to support economic growth in South Africa
items: Understanding South Africa’s mining slowdown
items: Why Higher Trend Inflation Makes Monetary Policy More Costly in South Africa
items: Agglomeration and firm-level productivity in African cities
items: Quantifying the impact of international food price spillovers on South Africa domestic market: Short- and long-term dynamics and transmission channels
items: Unlocking sustainable and inclusive growth in South Africa: Advancing the electricity reform agenda
items: Monetary-fiscal coordination in South Africa: Aligning the stars
items: Nominal versus Real Deposit Dollarization in Zambia: Determinants and Monetary Policy Insights
items: South Africa's inflation: Monetary or fiscal
items: Resolving the friction between Turnbull's (1983) and Klemperer-Meyer's (1989) Nash equilibria in affine supply functions
items: Governance, and regional dynamics of inflation persistence: Evidence from South Africa
items: Macroeconomic effects of lowering South Africa’s inflation target: An SVAR analysis

Industrial-policy objectives in South African competition policy
type: item
description: South African competition policy has long pursued industrial-policy objectives alongside its core competition mandate. Public-interest considerations were embedded in merger control from 1998, and the 2018 amendments gave them equal legal status with the competition assessment. These developments preceded the current European debate on using competition policy to advance innovation and other industrial policy objectives in the EU. This paper examines how industrial-policy objectives have been pursued in South African competition policy over the past thirty years. In merger control, these are often advanced through conditions involving ESOPs, HDP ownership commitments, and supplier and enterprise-development funds, as well as through potential-competition theories of merger harm. They are also advanced by similar types of remedies following market inquiries and, increasingly, abuse and cartel investigations.
subject: Policy Papers
  topic: section
subject: competition policy
  topic: keywords
subject: industrial policy
  topic: keywords
subject: merger control
  topic: keywords
subject: public interest
  topic: keywords
subject: ownership transformation
  topic: keywords
subject: market inquiries
  topic: keywords
subject: South Africa
  topic: keywords
subject: potential competition
  topic: keywords
subject: L40
  topic: subjects
subject: K21
  topic: subjects
subject: O25
  topic: subjects
subject: Industrial policy
  topic: disciplines
creator: Willem Boshoff
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-07-24
publication date: 2026-07-24
starting page: 33
ending page: 33
doi: 10.71587/n65tj363

Digital Infrastructure as a Driver of Inclusive Growth
type: item
description: South Africa’s persistent growth and employment underperformance have drawn renewed attention to structural reform in network industries. Over the past decade, GDP per capita growth has remained well below population growth, while unemployment has stayed above 32 percent. Digital transformation has recently been added to the priority reform areas under Operation Vulindlela Phase II, creating an opportunity for reassessing the role of digital infrastructure in inclusive growth. Drawing on an extensive empirical literature, much of it focused on sub-Saharan Africa, this paper examines South Africa’s digital infrastructure landscape: a progressively deconcentrating mobile market with near-universal 3G and extensive 4G coverage; a fixed broadband sector reshaped by the conditional approval of the Vodacom–Maziv transaction; and persistent gaps in affordability, adoption, and effective use. The central argument is that South Africa’s digital infrastructure challenge is no longer primarily one of basic network coverage. The binding constraints now lie in affordability, effective adoption, regulatory modernisation, energy reliability, and the institutional capacity to implement complex reforms.
subject: Policy Papers
  topic: section
subject: Digital infrastructure
  topic: keywords
subject: broadband
  topic: keywords
subject: mobile telecommunications
  topic: keywords
subject: inclusive growth
  topic: keywords
subject: competition policy
  topic: keywords
subject: telecommunications regulation
  topic: keywords
subject: spectrum policy
  topic: keywords
subject: fixed broadband
  topic: keywords
subject: L96
  topic: subjects
subject: L51
  topic: subjects
subject: L43
  topic: subjects
subject: O33
  topic: subjects
subject: O18
  topic: subjects
subject: O55
  topic: subjects
subject: Development Economics
  topic: disciplines
subject: Information Economics
  topic: disciplines
subject: Human Capital
  topic: disciplines
creator: Lukasz Grzybowski
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-07-15
publication date: 2026-07-15
starting page: 39
ending page: 39
doi: 10.71587/6ra1px15

Narrow Price Parity and Market Power in Digital Platforms
type: item
description: This paper deliberates an appropriate policy approach to Price Parity Obligations (“PPOs”), particularly narrow PPOs, applied by business-to-consumer (“B2C”) digital platforms. This is done by considering both the anticompetitive effects and procompetitive and efficiency arguments for the use of narrow PPOs in markets intermediated by digital platforms through the lens of market power. While wide PPOs are generally considered anticompetitive, this view is mixed for narrow PPOs. When digital platforms with market power apply narrow PPOs it suppresses price differentiation and price competition, resulting in higher average prices; it also increases business user dependency on the platform which reinforces platform market power; it can enable the exploitation of business users by unilaterally raising commissions and restrict their flexibility to innovate and develop their own direct distribution channels and marketing strategies. Arguments justifying the use of narrow PPOs include a determent of free-riding behaviour and the so-called ‘billboard effect’, but research suggests that on balance this has a minimal impact and courts have determined that narrow PPOs are not a precursor to platform efficiency gains. Smaller platforms with little or no market power are unlikely to have sufficient power to enforce narrow PPOs. This raises the relevance of applying these pricing restrictions altogether. When considering these arguments holistically, the paper argues that ex-ante regulation of narrow PPOs is the better policy approach.
subject: Policy Papers
  topic: section
subject: Price parity
  topic: keywords
subject: MFNs
  topic: keywords
subject: market power
  topic: keywords
subject: price competition
  topic: keywords
subject: Booking.com
  topic: keywords
subject: South Africa
  topic: keywords
subject: competition policy
  topic: keywords
subject: K21
  topic: subjects
subject: L83
  topic: subjects
subject: L42
  topic: subjects
subject: L86
  topic: subjects
subject: Competition policy
  topic: disciplines
subject: Industrial policy
  topic: disciplines
creator: Donnavan-John Linley
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-07-06
publication date: 2026-07-06
starting page: 34
ending page: 34
doi: 10.71587/bn041d70

Twenty-five years of inflation targeting and the new inflation target
type: item
description: This paper reviews South Africa’s experience with inflation targeting since its adoption in 2000 as the South African Reserve Bank (SARB) enters a new era, switching to a 3 percent target. The literature broadly concludes that the framework has succeeded in lowering inflation, reducing its volatility, and strengthening the credibility and transparency of the SARB. Empirical evidence shows declines in inflation persistence, a flattening of the Phillips curve, and a reduction in exchange rate pass-through over time, alongside a clearer and more rules-based monetary policy stance. This is an indication of well anchored inflation expectations which is vital for the credibility of the institutions. However, the review also highlights persistent structural constraints—high unemployment, weak potential growth, fiscal instability, and deep inequality—that have limited the broader developmental impact of the framework. Critics argue that inflation targeting may constrain policy space, though evidence suggests that these socioeconomic outcomes largely reflect structural rather than monetary factors. The paper concludes by examining current debates on lowering the inflation target and shows that future gains depend critically on fiscal coordination and progress on structural reforms, rather than on monetary policy adjustments alone.
subject: Policy Papers
  topic: section
subject: Inflation targeting
  topic: keywords
subject: Monetary policy
  topic: keywords
subject: credibility
  topic: keywords
subject: structural challenges
  topic: keywords
subject: South Africa
  topic: keywords
subject: E31
  topic: subjects
subject: E52
  topic: subjects
subject: E58
  topic: subjects
subject: E62
  topic: subjects
subject: E65
  topic: subjects
subject: Monetary Policy
  topic: disciplines
creator: Vincent Dadam
creator: Tumisang Loate
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-06-10
publication date: 2026-06-10
starting page: 35
ending page: 35
doi: 10.71587/b82qk786

Breaking the regravelling trap: A fiscal-federalism contract for upgrading South Africa’s unpaved roads
type: item
description: South Africa’s provincial and municipal road networks are dominated by low-volume gravel roads that are essential for service delivery and market access but are chronically under-upgraded. This paper argues that the persistence of repeated regravelling, reactive repairs, and post-disaster reinstatement is not primarily an engineering failure; it is an intergovernmental public investment problem. Responsibilities are decentralised across multiple principals and agents, benefits from upgrading are partly non-excludable and spill across jurisdictions, and budget holders face short-horizon fiscal constraints. The resulting wedge between national welfare and sub-national private incentives generates an underinvestment equilibrium in which economically justified upgrades are deferred and recurrent maintenance liabilities compound.
subject: Policy Papers
  topic: section
subject: Public investment management
  topic: keywords
subject: Intergovernmental fiscal relations
  topic: keywords
subject: Conditional grants
  topic: keywords
subject: Performance-based financing
  topic: keywords
subject: Low-volume sealed roads
  topic: keywords
subject: R42
  topic: subjects
subject: H77
  topic: subjects
subject: H54
  topic: subjects
subject: Public economics
  topic: disciplines
creator: Don Ross
creator: Matthew Townshend
creator: Vincent van der Westhuizen
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-06-08
publication date: 2026-06-08
starting page: 36
ending page: 36
doi: 10.71587/zwa9am73

Institutional Quality: A hurdle or a catalyst to eliminating energy poverty in sub-Saharan Africa?
type: item
description: Energy poverty is considered a significant challenge in sub-Saharan Africa (SSA), significantly impeding economic growth and social development. This study examines the role of institutional quality in addressing energy poverty across 45 SSA countries from 2002 to 2022, focusing on two critical indicators: access to clean cooking technologies and fuels and access to electricity. This study explores six institutional quality indicators—Control of Corruption, Regulatory Quality, Government Effectiveness, Rule of Law, Voice and Accountability, and Political Stability—and finds that corruption control is a key factor in reducing energy poverty across various income groups. Political stability is also linked to lower access to clean cooking, while the rule of law supports electricity access. Additionally, urbanisation is identified as a crucial factor for improving electricity access. This study underscores the central role of institutional quality in addressing energy poverty in SSA and calls for further research that includes infrastructure investment, affordability, and sustainability to better understand the complexities of energy access challenges in SSA.
subject: Working Paper Series
  topic: section
subject: Energy poverty
  topic: keywords
subject: Energy access
  topic: keywords
subject: Institutional quality
  topic: keywords
subject: Sub-Saharan Africa
  topic: keywords
subject: Q4
  topic: subjects
subject: P18
  topic: subjects
subject: P28
  topic: subjects
subject: P48
  topic: subjects
subject: Energy Economics
  topic: disciplines
subject: Econometrics
  topic: disciplines
subject: Political Economy
  topic: disciplines
creator: WiZelle Kritzinger
creator: Roula Inglesi-Lotz
creator: Jessika Bohlmann
creator: Victoria Graham
creator: Livingstone Senyonga
creator: Abel Ramoelo
rights: Copyright (c) 2025 https://creativecommons.org/licenses/by/4.0
date: 2025-10-14
publication date: 2025-10-14
doi: 10.71587/ddhg7p52

Regulating digital platforms: A comparative analysis of Kenya and South Africa
type: item
description: Kenya, often referred to as Africa’s “Silicon Savannah”, has rapidly evolved to become the regional digital business hub in East Africa. While Kenya’s approach to regulation has led to some market-driven competition, it faces similar competition-related challenges that many jurisdictions around the world face in the constantly evolving digital markets landscape. There have been competition concerns raised by entrepreneurs and businesses with respect to accessing markets and competing against the large domestic and global players that have already entered and taken up lead positions in Kenya’s digital ecosystem. This led to the Competition Authority of Kenya (CAK) introducing the Competition Amendment Bill in 2024 which is targeted at addressing platform dominance in digital ecosystems. South Africa adopted a different approach to regulating the digital economy using market inquiries as the primary tool to address potential harm to competition. The market inquiries highlighted concerns surrounding platform dominance and barriers to entry in e-commerce, amongst other concerns.
subject: Policy Papers
  topic: section
subject: Digital platforms
  topic: keywords
subject: Competition Policy
  topic: keywords
subject: Digital Market regulation
  topic: keywords
subject: L41
  topic: subjects
subject: K21
  topic: subjects
subject: O33
  topic: subjects
subject: Industrial
  topic: disciplines
subject: Growth
  topic: disciplines
subject: Digital
  topic: disciplines
creator: Karissa Moothoo Padayachie Nair
creator: Reena Das Nair
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-06-03
publication date: 2026-06-03
doi: 10.71587/wksft810

Unlocking Manufacturing Growth in South Africa: Firm Productivity, Labour Mobility and Participation
type: item
description: This paper examines the sources of South Africa’s manufacturing underperformance through the lens of three interrelated mechanisms: within-firm productivity growth, the between-firm reallocation of resources, and labour mobility and participation. While manufacturing has historically played a central role in structural transformation by supporting productivity growth, export expansion, and relatively stable formal employment, its contribution to output and employment has declined steadily over the past two decades. The paper argues that this decline cannot be understood through aggregate trends alone. Instead, it reflects how distortions across firms and workers disrupt these mechanisms, constraining firm upgrading, weakening reallocation toward more productive producers, and limiting the extent to which labour mobility and participation translate into upward progression for workers and productivity growth for firms.
subject: Policy Papers
  topic: section
subject: Manufacturing
  topic: keywords
subject: Productivity
  topic: keywords
subject: allocative efficiency
  topic: keywords
subject: firm heterogeneity
  topic: keywords
subject: labour mobility
  topic: keywords
subject: industrial policy
  topic: keywords
subject: productivity proofing
  topic: keywords
subject: D22
  topic: subjects
subject: D24
  topic: subjects
subject: O14
  topic: subjects
subject: O25
  topic: subjects
subject: L60
  topic: subjects
subject: Economic Development
  topic: disciplines
subject: Industrialisation
  topic: disciplines
creator: Carol Newman
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-06-01
publication date: 2026-06-01
starting page: 40
ending page: 40
doi: 10.71587/g33f0394

Trade under duress: Assessing South Africa’s trade diversification toward China in response to U.S. tariff actions
type: item
description: This paper examines the scope for South Africa (within SACU) to diversify its exports toward China in the context of rising global trade tensions and increased policy uncertainty, particularly following the imposition of tariffs by the United States. As traditional export markets become more volatile, the need for strategic diversification toward fast-growing economies has become more urgent. China, given its scale, sustained demand growth, and central role in global trade, presents a key opportunity for reorienting South Africa’s export strategy. Using a combination of descriptive trade analysis and a partial equilibrium (SMART) modelling framework, the paper assesses the potential trade effects of tariff liberalisation under a potential SACU–China free trade agreement (FTA). The results indicate that the aggregate export response is relatively modest, with SACU’s exports to China increasing by approximately 4%. This reflects the structure of existing trade, where the bulk of exports, primarily minerals and precious metals, already face low or zero tariffs, limiting scope for further expansion along the intensive margin.
subject: Policy Papers
  topic: section
subject: Trade
  topic: keywords
subject: Exports
  topic: keywords
subject: South Africa
  topic: keywords
subject: F13
  topic: subjects
subject: F14
  topic: subjects
subject: F15
  topic: subjects
subject: O53
  topic: subjects
subject: Trade
  topic: disciplines
creator: Godfrey Kamutando
creator: Vincent van der Westhuizen
creator: Matthew Stern
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-05-26
publication date: 2026-05-26
starting page: 46
ending page: 46
doi: 10.71587/8b5qjq30

Services-led growth in the context of de-industrialization: Opportunities for structural transformation and job creation in South Africa
type: item
description: South Africa’s persistent unemployment crisis, with the unemployment rate reaching 32.0 percent in 2024, has intensified debates about viable pathways for structural transformation, following the sustained decline of the manufacturing sector. This paper investigates whether services-led growth can replace the role of manufacturing and identifies which services subsectors hold the greatest potential for productivity enhancement and employment creation.
subject: Policy Papers
  topic: section
subject: Structural transformation
  topic: keywords
subject: services-led growth
  topic: keywords
subject: deindustrialisation
  topic: keywords
subject: labour productivity
  topic: keywords
subject: South Africa
  topic: keywords
subject: O14
  topic: subjects
subject: O55
  topic: subjects
subject: J21
  topic: subjects
subject: O47
  topic: subjects
subject: L52
  topic: subjects
subject: Economic Growth
  topic: disciplines
subject: Human Capital
  topic: disciplines
creator: Zaakir Asmal
creator: Christopher Rooney
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-05-18
publication date: 2026-05-18
starting page: 55
ending page: 55
doi: 10.71587/esc67j40

Towards an Integrated Agricultural Growth Path for South Africa
type: item
description: South Africa’s agricultural sector has delivered strong productivity growth and export performance over the past three decades, reflecting a growth path that is predominantly export-led, technology-enabled, and anchored in high-value value chains (notably horticulture and livestock). Yet this trajectory has been accompanied by persistent structural dualism, limited broad-based inclusion, and a weak transmission of growth into labour absorption in a context of chronically high unemployment. While the commercial core has deepened its competitiveness, a large share of rural households remains confined to low-productivity farming and survivalist self-employment, with limited integration into dynamic value chains. The paper argues that the core policy challenge is no longer whether the existing commercial sector can “grow”, but whether the growth path can be broadened to (i) expand labour-absorbing production, agro-processing, and allied rural services, (ii) diffuse technology, capabilities, and market access beyond the top tier of producers, and (iii) remove binding constraints (logistics, energy, biosecurity, and institutional capability) that increasingly threaten competitiveness. Building on evidence from South Africa’s recent policy architecture (notably the National Development Plan 2030 and the Agriculture and Agro-processing Master Plan), the paper proposes an integrated growth trajectory centred on bringing an additional 2.5 million hectares of state-held underutilised land into effective production, while strengthening pathways for smallholders and new farmers - including through self-employment and enterprise development - to participate in higher-value markets. This includes de-risked finance, targeted infrastructure, and capable market institutions. The paper further highlights the role of social enterprise models as platforms for skills formation, youth transitions, and the development of hybrid employment pathways spanning farming, agro-processing, and agr…
subject: Policy Papers
  topic: section
subject: Agricultural growth
  topic: keywords
subject: Structural transformation
  topic: keywords
subject: inclusion
  topic: keywords
subject: employment
  topic: keywords
subject: exports
  topic: keywords
subject: land reform
  topic: keywords
subject: value chains
  topic: keywords
subject: O13
  topic: subjects
subject: Q12
  topic: subjects
subject: Q18
  topic: subjects
subject: J43
  topic: subjects
subject: Agricultural
  topic: disciplines
subject: Environmental
  topic: disciplines
creator: Tinashe Kapuya
creator: Wandile Sihlobo
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-05-06
publication date: 2026-05-06
starting page: 22
ending page: 22
doi: 10.71587/8c04pq11

Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa
type: item
description: South Africa faces the intertwined challenges of weak economic growth, persistently high poverty and extreme income inequality. This paper assesses what levels of poverty reduction and distributional change are realistically achievable over the next fifteen years under plausible growth scenarios, given binding structural and fiscal constraints. Using a stylised log-normal income distribution calibrated to 2023 data, the analysis simulates poverty outcomes under sustained per capita growth rates of 1–2 per cent (consistent with GDP growth of 2–3 per cent) and cumulative Gini reductions of 0, 2, 4 and 6 points. The results reveal a clear asymmetry. Moderate growth generates substantial reductions in poverty at both lower- and upper-bound poverty lines, while plausible medium-term reductions in inequality make a smaller incremental contribution. van der Berg, S. (2026). Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa (ERSA Policy Paper No. 48). Economic Research Southern Africa. https://doi.org/10.71587/rr3y8746
subject: Policy Papers
  topic: section
subject: Poverty reduction
  topic: keywords
subject: Income inequality
  topic: keywords
subject: Economic growth
  topic: keywords
subject: Policy instruments
  topic: keywords
subject: Labour market structure
  topic: keywords
subject: Fiscal sustainability
  topic: keywords
subject: South Africa
  topic: keywords
subject: I32
  topic: subjects
subject: D63
  topic: subjects
subject: O11
  topic: subjects
subject: O15
  topic: subjects
subject: E61
  topic: subjects
subject: Human Capital
  topic: disciplines
creator: Servaas van der Berg
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-04-22
publication date: 2026-04-22
starting page: 39
ending page: 39
doi: 10.71587/rr3y8746

Power, People, and Productivity: Skills Development for South Africa’s Just Energy Transition
type: item
description: Just over 60 million people call South Africa home; at the same time, the country faces an unemployment rate of 33.2%, alongside persistent inequality, entrenched poverty, and economic stagnation. The Just Energy Transition (JET) presents a critical opportunity to address some of these structural challenges. While the JET is not a panacea, it offers scope to simultaneously strengthen energy security, stimulate the economy and job creation, and address long-standing skills constraints. In what the International Energy Agency terms the “Age of Electricity”, global demand for clean energy is accelerating, and it will not wait for South Africa’s education and skills systems to adjust. Failure to proactively align human capital development with the energy transition risks entrenching existing inequalities and creating new ones, undermining long-term inclusive growth. This paper argues that skills debates surrounding the energy transition must place greater emphasis on basic education, alongside post-school education and training, despite its relative neglect in the existing literature. This paper employs a qualitative policy analysis and develops a conceptual framework linking basic education, skills formation, labour market outcomes, and the energy transition to economic growth. A constraint-based diagnostic approach is used to identify key bottlenecks in South Africa’s energy skills pipeline. As a result, this paper identifies four interlinked reform levers. First, it recommends a clearly mandated convening authority to align education, skills, energy, and labour-market policies. Second, it highlights basic education as a foundational constraint, calling for the integration of JET-relevant content to expand the future skills pipeline. Third, it points to misalignment in post-school education and training, motivating reforms to SETAs and deeper public-private collaboration. Finally, it emphasises the need for stronger and more decentralised industry participation in ski…
subject: Policy Papers
  topic: section
subject: Just Energy Transition
  topic: keywords
subject: Employment
  topic: keywords
subject: Skills
  topic: keywords
subject: Education
  topic: keywords
subject: Energy Security
  topic: keywords
subject: I25
  topic: subjects
subject: J21
  topic: subjects
subject: J24
  topic: subjects
subject: O15
  topic: subjects
subject: Environmental Economics
  topic: disciplines
creator: Roula Inglesi-Lotz
creator: WiZelle Kritzinger
creator: Vutomi Nkuna
creator: Tania Nqosa
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-04-09
publication date: 2026-04-09
starting page: 44
ending page: 44
doi: 10.71587/2tx4qz05

Firm Adaptation and Reallocation under Rationing: Evidence from South Africa
type: item
description: Rationing policies are frequently implemented due to equity concerns, yet whether equitable-exposure rules deliver equal economic impacts remains unclear. We study the 2021--2023 power crisis in South Africa, exploiting quasi-random variation in outage exposure and combining hour-level outage data with geocoded transactions from a leading payment platform. Although aggregate daily sales do not change on outage days, revenue is reallocated: below-median firms lose roughly eleven percent of daily revenue while above-median firms---able to invest in defensive technology---gain a similar share. These unequal effects are amplified when outages are anticipated, suggesting the impacts of rationing are not equal despite equitable exposure.
subject: Working Paper Series
  topic: section
subject: Economic Development
  topic: keywords
subject: Firms
  topic: keywords
subject: Demand Reallocation
  topic: keywords
subject: Electricity shortages
  topic: keywords
subject: Rationing
  topic: keywords
subject: L11 (Production, Pricing, and Market Structure; Size Distribution of Firms)
  topic: subjects
subject: O14 (Industrialization; Manufacturing and Service Industries; Choice of Technology)
  topic: subjects
subject: Q41 (Energy: Demand and Supply; Prices)
  topic: subjects
subject: L25 (Firm Performance: Size, Diversification, and Scope)
  topic: subjects
subject: O12 (Microeconomic Analyses of Economic Development)
  topic: subjects
subject: Economics
  topic: disciplines
subject: Energy
  topic: disciplines
subject: Firms
  topic: disciplines
subject: economic development
  topic: disciplines
subject: technology
  topic: disciplines
creator: Rowan Clarke
creator: Chris Eaglin
creator: Zach Kuloszewski
creator: Jun Wong
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-05-13
publication date: 2026-05-13
doi: 10.71587/v2r8eq72

Fiscal r-star and macroeconomic coordination in South Africa
type: item
description: South Africa’s fiscal and monetary authorities now operate in a more difficult environment than they did a decade ago. Debt has risen, growth has disappointed, and sovereign risk premia have remained elevated. At the same time, inflation has fallen and the policy debate has shifted toward whether lower inflation can support growth. Our research shows that these developments are tightly connected. This brief is based on the ERSA working paper and a forthcoming South African Journal of Economics article, “Monetary-fiscal coordination in South Africa: Aligning the stars.” The paper introduces a new policy concept for South Africa: the fiscal-neutral real interest rate, or fiscal r-star. This is the real interest rate consistent with keeping the debt-to-GDP ratio stable for a given primary balance, growth rate, and debt stock. We compare this with the usual monetary r-star, the real interest rate consistent with inflation at target and output at potential.
subject: Policy Briefs
  topic: section
subject: Monetary-fiscal coordination
  topic: keywords
subject: South Africa
  topic: keywords
subject: E62
  topic: subjects
subject: Monetary
  topic: disciplines
subject: Fiscal
  topic: disciplines
creator: Roy Havemann
creator: Hylton Hollander
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-04-08
publication date: 2026-04-08
starting page: 8
ending page: 8
doi: 10.71587/exk00k47

The Structural Change Emergency in South Africa
type: item
description: In the decade up to 2019, South Africa underwent what may reasonably be described as a structural change emergency. Aggregate annual labour productivity growth was negative on average across the decade; this was accounted for by negative or negligible efficiency gains within all major sectors, and by growth-reducing structural change overall. Growth-reducing structural change implies that labour moved on average from more-to-less productive sectors. The underwhelming structural change and sectoral productivity growth performance of South Africa in this period stand out when compared with earlier periods in post-apartheid South Africa and in international comparison with Africa and the BRICS. Since 2020, there are green shoots of recovery, implying that the structural change emergency may be over. Nevertheless, this recovery is both non-transformative and highly unbalanced sectorally, although it is quite balanced geographically across the provinces of South Africa. The recovery is driven entirely by productivity growth or labour reallocation within, and reallocation of labour towards, the services sector. Recent evidence in the academic literature suggests that services can drive rapid growth through structural transformation, but the current situation in South Africa where non-services sectors are still acting as a drag on growth remains clearly sub-optimal. Hamilton, C., & Mensah, E. (2026). The structural change emergency in South Africa (ERSA Policy Paper No. 46). Economic Research Southern Africa. https://doi.org/10.71587/7tgeja02
subject: Policy Papers
  topic: section
subject: South Africa
  topic: keywords
subject: servicification
  topic: keywords
subject: industrialization
  topic: keywords
subject: structural change
  topic: keywords
subject: productivity
  topic: keywords
subject: E22
  topic: subjects
subject: E62
  topic: subjects
subject: O16
  topic: subjects
subject: O40
  topic: subjects
subject: Growth
  topic: disciplines
creator: Calumn Hamilton
creator: Emmanuel Mensah
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-04-08
publication date: 2026-04-08
starting page: 44
ending page: 44
doi: 10.71587/7tgeja02

Reigniting Investment in South Africa
type: item
description: Over the past decade, South Africa has experienced a pronounced and persistent decline in fixed investment, with real gross fixed capital formation contracting and capital stock growth slowing to near zero. Investment to GDP fell to 13.9% in 2025, excluding COVID the worst ratio since 1950. This paper documents the stylised facts of the investment slowdown and examines its underlying drivers. It argues that weak business confidence, elevated political and economic uncertainty, rising long-term real interest rates associated with fiscal deterioration, and unproductive public-sector investment have jointly constrained private capital formation. Using survey-based measures of sentiment and uncertainty, together with simple econometric tests, the paper finds evidence of a meaningful relationship between business confidence and private-sector investment, including indications of Granger causality and cointegration. At the same time, higher borrowing costs and limited evidence of fiscal crowding-in have further dampened capital deepening. The consequence has been stagnant capital accumulation, declining capital productivity, and subdued economic growth. The paper proposes a focused reform agenda aimed at restoring a virtuous cycle between confidence, investment and growth. Scenario analysis suggests that under a credible reform and fiscal consolidation pathway, growth could rise toward and potentially exceed 3 percent, materially improving employment and poverty outcomes. Havemann, R. (2026). Reigniting investment in South Africa (ERSA Policy Paper No. 45). Economic Research Southern Africa. https://doi.org/10.71587/7egp8e64
subject: Policy Papers
  topic: section
subject: Investment
  topic: keywords
subject: business confidence
  topic: keywords
subject: growth
  topic: keywords
subject: E22
  topic: subjects
subject: E62
  topic: subjects
subject: O16
  topic: subjects
subject: O40
  topic: subjects
subject: Growth
  topic: disciplines
creator: Roy Havemann
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-04-08
publication date: 2026-04-08
starting page: 30
ending page: 30
doi: 10.71587/7egp8e64

Public debt and inflation dynamics in South Africa: An estimated NK-DSGE model with a monetary and fiscal policy mix regime
type: item
description: This study estimates a closed economy NK-DSGE model with a monetary and fiscal policy mix regime to examine the role of a coexistence regime in shaping the effects of policy shocks on the dynamics of public debt, inflation, and other key variables in South Africa. The results show that when the monetary and fiscal authorities coordinate to stabilize public debt, as in the coexistence regime, the macroeconomic effects of fiscal and monetary policy shocks are relatively balanced. The coexistence regime emerges as a more desirable policy mix, offering a solution to stable economic growth while effectively managing both public debt and inflation, compared to Regime M (an active monetary policy and a passive fiscal policy) and Regime F (an active fiscal policy and a passive monetary policy). While supply and demand shocks remain important drivers of fluctuations in public debt and inflation, the contribution of policy shocks is also non-negligible. Both the debt service cost channel and the initial fiscal condition play a significant role in shaping the dynamics of public debt and inflation.
subject: Working Paper Series
  topic: section
subject: Monetary and fiscal policy mix regime; Fiscal inflation; Unbacked public debt; New-Keynesian DSGE; Bayesian.
  topic: keywords
subject: Monetary and fiscal policy mix regime; Fiscal inflation; Unbacked public debt; New-Keynesian DSGE; Bayesian.
  topic: subjects
subject: macroeconomics
  topic: disciplines
subject: monetary and fiscal economics
  topic: disciplines
creator: Guangling Liu
creator: Marrium Mustapher
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-06-26
publication date: 2026-06-26
doi: 10.71587/sf778y13

Enhancing merger control to support economic growth in South Africa
type: item
description: Competition policy – and merger control in particular – is an important policy to support productivity and innovation, investment, and long-run economic growth. This paper argues that merger control, when compared to anti-cartel enforcement, has become dominated by discretionary policy preferences fuelled by the expansive ‘public interest’ provisions of the amended Competition Act. Drawing on theoretical and empirical evidence, the paper identifies ministerial discretion, an outsized and opaque role for public interest concerns and the introduction of “vulnerability” as factors that limit the focus of merger control on competition matters. Boshoff, W. (2026). Enhancing merger control to support economic growth in South Africa (ERSA Policy Paper No. 44). Economic Research Southern Africa. https://doi.org/10.71587/4z4q0k71
subject: Policy Papers
  topic: section
subject: Competition policy
  topic: keywords
subject: merger control
  topic: keywords
subject: public interest
  topic: keywords
subject: industrial policy
  topic: keywords
subject: independence
  topic: keywords
subject: time inconsistency
  topic: keywords
subject: equity
  topic: keywords
subject: economic growth
  topic: keywords
subject: South Africa
  topic: keywords
subject: Competition policy
  topic: subjects
subject: industrial policy
  topic: subjects
subject: L40
  topic: disciplines
subject: K21
  topic: disciplines
subject: O43
  topic: disciplines
subject: L52
  topic: disciplines
creator: Willem Boshoff
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-02-12
publication date: 2026-02-12
starting page: 26
ending page: 26
doi: 10.71587/4z4q0k71

Understanding South Africa’s mining slowdown
type: item
description: South Africa’s mining sector presents a significant economic paradox: despite possessing a mineral endowment of global significance—particularly in platinum group metals (PGMs), manganese, and chromium—the industry has experienced a profound structural decline since the 1970s. This paper investigates the binding constraints that have prevented the sector from capitalising on global commodity booms and the green energy transition. Applying the Growth Diagnostics framework developed by Hausmann, Rodrik, and Velasco (2005), the study argues that the sector's decline is primarily endogenous, driven by human-made constraints rather than geological exhaustion. Botha, R. (2026). Understanding South Africa’s mining slowdown (ERSA Policy Paper No. 43). Economic Research Southern Africa. https://doi.org/10.71587/0jznvd71
subject: Policy Papers
  topic: section
subject: Mining sector
  topic: keywords
subject: South Africa
  topic: keywords
subject: Growth diagnostics
  topic: keywords
subject: binding constraints
  topic: keywords
subject: Mineral Policy
  topic: keywords
subject: Exploration
  topic: keywords
subject: Junior mining
  topic: keywords
subject: Economic development
  topic: keywords
subject: South African economy
  topic: keywords
subject: L71
  topic: subjects
subject: L72
  topic: subjects
subject: O43
  topic: subjects
subject: Q38
  topic: subjects
subject: Trade
  topic: disciplines
subject: Industrial
  topic: disciplines
subject: Competition
  topic: disciplines
creator: Robert Botha
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-02-06
publication date: 2026-02-06
starting page: 54
ending page: 54
doi: 10.71587/0jznvd71

Why Higher Trend Inflation Makes Monetary Policy More Costly in South Africa
type: item
description: Most inflation-targeting central banks target a small but positive underlying rate of inflation, often called trend inflation1. Yet its appropriate level remains uncertain. The extended deliberation in South Africa to move from a 3 - 6% target band to a 3% point target (with a ±1% tolerance band) illustrates this tension. In our working paper (Trend Inflation and the Costs of Price Dispersion in a Fiscal DSGE Model), we examine the role of trend inflation in an economy and argue that, all else equal, lower trend inflation is better for the economy.
subject: Policy Briefs
  topic: section
subject: Trend inflation
  topic: keywords
subject: monetary policy
  topic: keywords
subject: price dispersion
  topic: keywords
subject: Phillips curve
  topic: keywords
subject: sacrifice ratio
  topic: keywords
subject: Monetary Policy
  topic: subjects
subject: E31
  topic: disciplines
subject: E52
  topic: disciplines
subject: E12
  topic: disciplines
subject: E32
  topic: disciplines
creator: Hylton Hollander
creator: Clinton Joel
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-01-01
publication date: 2026-01-01
starting page: 8
ending page: 8
doi: 10.71587/za1fge30

Agglomeration and firm-level productivity in African cities
type: item
description: Africa's prosperity hinges on the success of its cities. Yet in many African countries, the expected productivity gains from urbanisation are stifled by chronic infrastructure deficits, governance weaknesses and market inefficiencies. This study examines evidence on the relationship between agglomeration and firm-level productivity covering 157 cities across 33 African nations, using comparable cross-country data from the World Bank Enterprise Surveys and the Global Human Settlement Layer. The findings reveal a loose but positive link between city size and productivity. This is robust to econometric controls and choice of sales per worker, wages or total factor productivity. Interestingly, service firms benefit roughly twice as much as manufacturers, underscoring the importance of service industries in Africa’s growth. Surprisingly, features of the built environment, such as surface area, building height and road networks show limited impact, suggesting that infrastructure quality may matter more than urban form. While agglomeration economies offer potential benefits for African countries, the relationship is weak and highly variable across cities and countries. Further research is needed to uncover the forces and obstacles at work in more detail.
subject: Working Paper Series
  topic: section
subject: agglomeration economies
  topic: keywords
subject: Africa
  topic: keywords
subject: urbanisation
  topic: keywords
subject: built environment
  topic: keywords
subject: city size
  topic: keywords
subject: urban productivity
  topic: keywords
subject: infrastructure
  topic: keywords
subject: firm-level data
  topic: keywords
subject: urban productivity
  topic: subjects
subject: agglomeration economies
  topic: subjects
subject: urbanisation and development
  topic: subjects
subject: African cities
  topic: subjects
subject: firm-level data
  topic: subjects
subject: urban economics
  topic: disciplines
subject: development economics
  topic: disciplines
subject: spatial economics
  topic: disciplines
creator: Justin Visagie
creator: Ivan Turok
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-05-08
publication date: 2026-05-08
doi: 10.71587/cen3c675

Quantifying the impact of international food price spillovers on South Africa domestic market: Short- and long-term dynamics and transmission channels
type: item
description: This study quantifies the degree of return and volatility risk transmission from the global food market to the South African food market for the period from January 2010 to December 2023. It employs the TVP-VAR-based frequency connectedness to quantify and observe the evolution of both return and volatility risk transmission from the global food market to the South African food market. It also uses the quantile regression technique to identify the main driving factors of both return and volatility spillover from the international food market into the South African market. Results show a slightly higher level of return connectedness than volatility connectedness among the food markets and that shocks from the global food market dominate shocks from the South African food market. While return shocks appear to be more of a short-term phenomenon, volatility shocks are mainly driven by long-term factors. The degrees of shocks transmission are significantly higher when we use the five main global food types (meat, dairy, cereals, oil, and sugar) instead of the composite index of global food prices, especially in terms of volatility. In addition, an increase in geopolitical risks, equity market returns in South Africa, oil prices, and the COVID-19 pandemic were the main drivers of the transmission of return risk from the global food market to the South African food market. However, the depreciation of the Rand value decreased the spillover level. Regarding volatility risk transmission, the gold price, the South African equity, and the fixed income market return are the main drivers of volatility shock transmission from the global food market into the South African food market. The study recommends that South Africa strengthen domestic food production and diversify to build resilience against global food market shocks, especially by supporting vulnerable crops like barley, sorghum, and wheat. Policymakers should also implement strategic reserves, develop short-term risk man…
subject: Working Paper Series
  topic: section
subject: inflation
  topic: keywords
subject: Food Prices
  topic: keywords
subject: Risk Transmission
  topic: keywords
subject: Driving Factors
  topic: keywords
subject: Frequency-based connectedness
  topic: keywords
subject: South Africa
  topic: keywords
subject: Inflation
  topic: subjects
subject: South Africa
  topic: subjects
subject: food prices
  topic: subjects
subject: risk transmission
  topic: subjects
subject: driving factors
  topic: subjects
subject: frequency-based connectedness
  topic: subjects
subject: Monetary Policy
  topic: disciplines
subject: Macroeconomics
  topic: disciplines
creator: GISELE MAH
creator: Christian Urom
creator: Denis N Yuni
creator: Realeboga Mahapa
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-03-17
publication date: 2026-03-17
doi: 10.71587/ek837p18

Unlocking sustainable and inclusive growth in South Africa: Advancing the electricity reform agenda
type: item
description: South Africa continues to face deep structural bottlenecks to growth, including weaknesses in the business environment, limited workers’ employability and access to jobs, and persistent inefficiencies in key network industries such as transport, water, and electricity. These challenges are underscored in the 2025 Economic Survey of South Africa, released in June 2025. Although notable progress has been made under Operation Vulindlela, significant obstacles remain, including within the electricity sector (OECD, 2025). Electricity is a foundational input for economic activity, central to firms’ production decisions and to the functioning of the broader economy. This note examines how restoring energy security, accelerating renewable deployment, and reforming municipal and pricing structures can stimulate growth and support a just and sustainable green transition.
subject: Policy Briefs
  topic: section
subject: Electricity reform
  topic: keywords
subject: Energy security
  topic: keywords
subject: Load shedding
  topic: keywords
subject: Just energy transition
  topic: keywords
subject: Economic growth constraints
  topic: keywords
subject: Q41
  topic: subjects
subject: Q48
  topic: subjects
subject: O13
  topic: subjects
subject: H54
  topic: subjects
subject: L94
  topic: subjects
subject: Environmental Economics
  topic: disciplines
subject: Industrial Policy
  topic: disciplines
creator: Roula Inglesi-Lotz
creator: Lilas Demmou
rights: Copyright (c) 2025 https://creativecommons.org/licenses/by/4.0
date: 2025-11-26
publication date: 2025-11-26
starting page: 16
ending page: 16
doi: 10.71587/jgedq919

Monetary-fiscal coordination in South Africa: Aligning the stars
type: item
description: Monetary-fiscal policy tensions build-up when debt is rising and inflation is falling. The consequence is that either fiscal policy must achieve fiscal consolidation with monetary policy maintaining price stability (passive FP-active MP) or monetary policy must accommodate fiscal policy in debt stabilisation leaving fiscal policy free to achieve its spending and redistribution objectives (passive MP-active FP). We introduce the concept of a fiscal neutral rate (fiscal r-star) into a two-agent new Keynesian dynamic stochastic general equilibrium model estimated with South African data. We show two persistent gaps: (i) monetary r-star exceeds fiscal r-star, indicating a misalignment between monetary and fiscal policy; and (ii) market interest rates exceed fiscal r-star, implying that, without policy action, the risk premium on borrowing will continue to be a drag on growth and debt service costs are likely to crowd out other spending. Our model simulations show that the optimal welfare outcomes are achieved by taking steps to align fiscal r-star with monetary r-star, through introducing a credible fiscal anchor.
subject: Working Paper Series
  topic: section
subject: policy coordination
  topic: keywords
subject: DSGE
  topic: keywords
subject: monetary-fiscal gap
  topic: keywords
subject: fiscal r-star
  topic: keywords
subject: monetary r-star
  topic: keywords
subject: neutral rate
  topic: keywords
subject: natural rate
  topic: keywords
subject: Macroeconomic policy
  topic: subjects
subject: Fiscal and Monetary policy
  topic: subjects
subject: Monetary and fiscal policy coordination
  topic: subjects
subject: General equilibrium
  topic: subjects
subject: Optimal policy
  topic: subjects
subject: Rules
  topic: subjects
subject: Anchors
  topic: subjects
subject: Macroeconomic, monetary economics
  topic: disciplines
subject: Monetary Policy
  topic: disciplines
subject: Fiscal policy
  topic: disciplines
creator: Hylton Hollander
creator: Roy Havemann
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-02-25
publication date: 2026-02-25
doi: 10.71587/y2wk1z39

Nominal versus Real Deposit Dollarization in Zambia: Determinants and Monetary Policy Insights
type: item
description: This study investigates the determinants of deposit dollarization in Zambia after transition of monetary policy to inflation targeting and introduction of a Monetary Policy Rate (MPR). Using quarterly data from 2012 to 2023, two indices of dollarization are constructed — nominal and real (adjusted for exchange rate fluctuations). We find that while nominal dollarization has remained elevated, real dollarization has trended downward over time. Empirical estimates from an autoregressive distributed lag (ARDL) model indicate that nominal dollarization is largely driven by money supply, output, and the exchange rate, whereas real dollarization is determined primarily by output and exchange rate volatility. The MPR exerts a modest but statistically significant effect on nominal dollarization. Impulse responses obtained using local projection framework show that MPR hikes yield short-term reductions in nominal dollarization, whereas exchange rate innovations have a more pronounced and sustained influence over both indices time. These findings underscore the need for coordinated monetary and exchange rate stabilization policies to effectively manage dollarization pressures in developing economies with multiple currencies in circulation.
subject: Working Paper Series
  topic: section
subject: Deposit dollarization; real and nominal dollarization; monetary policy; Zambia
  topic: keywords
subject: Deposit dollarization; real and nominal dollarization; monetary policy; Zambia
  topic: subjects
subject: monetary and fiscal economics
  topic: disciplines
creator: Patricia Funjika
creator: Mufara Gatawa
creator: Kwabala Ndautu
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-04-20
publication date: 2026-04-20
starting page: 37
ending page: 37
doi: 10.71587/gb12d612

South Africa's inflation: Monetary or fiscal
type: item
description: Conventional macroeconomics has viewed inflation as a monetary phenomenon through the Quantity Theory of Money. Ever-increasing sovereign debt globally has caused concern among economists. These concerns follow not from the ability of governments to repay their debt, but rather from the impact of sizeable debt portfolios on price levels. The Fiscal Theory of the Price Level epitomizes these concerns, contrasting the traditional view on inflation by arguing that it is a fiscal phenomenon caused by debt issuance without real backing. This study uses this fiscal inflation theory to analyse South Africa's inflation through a fiscal-monetary VAR model, finding that South Africa's inflation dynamics are accurately described by both monetary and fiscal factors, but more so by the latter.
subject: Working Paper Series
  topic: section
subject: Monetary and fiscal interactions, Fiscal theory of the price level, Inflation
  topic: keywords
subject: Monetary and fiscal interactions, Fiscal theory of the price level, Inflation
  topic: subjects
subject: Macroeconomic, monetary economics
  topic: disciplines
creator: Guangling Liu
creator: Christopher Solomon
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-03-30
publication date: 2026-03-30
doi: 10.71587/r0ee6h43

Resolving the friction between Turnbull's (1983) and Klemperer-Meyer's (1989) Nash equilibria in affine supply functions
type: item
description: Turnbull (1983) describes unique symmetric Nash equilibria for supply function competition under demand uncertainty which consist of affine strategies that are nonlinear. For the same economy Klemperer and Meyer (1989) derive unique Nash equilibria that are linear. This note shows that the friction between both results comes from a mathematical error in Turnbull (1983). Correcting this error establishes the same linear Nash equilibria for both models.
subject: Working Paper Series
  topic: section
subject: Supply function competition; Demand uncertainty; Uniqueness of Nash equilibria
  topic: keywords
subject: Uniqueness
  topic: subjects
subject: Supply function competition
  topic: subjects
subject: game theory
  topic: disciplines
creator: Alexander Zimper
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-02-13
publication date: 2026-02-13
doi: 10.71587/cwevzq84

Governance, and regional dynamics of inflation persistence: Evidence from South Africa
type: item
description: Regional inflation patterns within a single economy can have important implications for the effectiveness of fiscal and monetary policy. Yet, much of the existing research has focused on cross-country or monetary union dynamics, under the assumption that intra-country regions are sufficiently homogeneous for national policy to transmit uniformly. This assumption may be particularly problematic in countries like South Africa, where significant regional disparities in economic activity, infrastructure, and governance exist — each of which affects how policy is transmitted to the subnational level. This study uses consumer price index (CPI) data from 27 local municipalities between 2008 and 2023 to examine the extent of variation in inflation and inflation persistence across South African regions. Employing an autoregressive model, the study assesses the role of municipal governance, measured by audit outcomes from the Auditor-General of South Africa, in mediating this persistence. The results indicate marked regional differences in both inflation levels and persistence. Regions with lower economic activity tend to experience higher inflation persistence, suggesting a compounding vulnerability for already marginalised populations. Governance quality appears to mitigate inflation persistence, particularly in market-determined prices, while its effect is weaker in administered price categories, likely due to slower adjustment processes. The findings contribute to understanding the sub-national drivers of inflation and inform the development of targeted policy interventions to address regional disparities and enhance overall economic stability in South Africa.
subject: Working Paper Series
  topic: section
subject: Inflation
  topic: keywords
subject: Inflation Persistence
  topic: keywords
subject: Governance
  topic: keywords
subject: Regional effects
  topic: keywords
subject: inflation
  topic: subjects
subject: governance
  topic: subjects
subject: Regional differences
  topic: subjects
subject: inflation persistence
  topic: subjects
subject: Economics,
  topic: disciplines
subject: Institutioinal Economics
  topic: disciplines
subject: Macroeconomics
  topic: disciplines
creator: David Fadiran
creator: Tutsirai Sakutukwa
rights: Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
date: 2026-03-26
publication date: 2026-03-26
doi: 10.71587/9143k271

Macroeconomic effects of lowering South Africa’s inflation target: An SVAR analysis
type: item
description: The paper estimates the macroeconomic effects of shifting to a lower inflation target for South Africa, within a Structural Vector Autoregressive (SVAR) framework identified using the Max Share Identification strategy and estimated with Bayesian methods. We find that a decrease of 1% (in terms of percentage points change) in the inflation target leads to output expanding over the next few quarters after an initial muted response, with a peak of about 1.20% after about two years and remains positive and statistically significant for nearly three years after the shock. We also observe a short and medium-term co-movement of inflation and the nominal policy rate in response to the inflation target shock, reminiscent of Neo-Fisherian effects. However, unlike most of the findings in the literature whereby the effects of inflation target shocks are persistent, we find that they are less persistent for the South African economy with this finding being robust to using an alternative identification approach. We find a strongly operative sovereign credit risk and asset price channels through which lower inflation target increases output. These findings are relevant for emerging markets where sovereign credit risks tend to be elevated compared to developed economies.
subject: Working Paper Series
  topic: section
subject: inflation
  topic: keywords
subject: Inflation Targeting
  topic: keywords
subject: Monetary Policy
  topic: keywords
subject: Inflation expectations
  topic: subjects
subject: inflation targeting
  topic: subjects
subject: Inflation
  topic: subjects
subject: Monetary Policy
  topic: disciplines
subject: Applied Time-Series Econometrics
  topic: disciplines
creator: Keagile Lesame
creator: Richard Kima
rights: Copyright (c) 2025 https://creativecommons.org/licenses/by/4.0
date: 2025-12-11
publication date: 2025-12-11
doi: 10.71587/qtdze603